By Shonali Advani

Series B is a crucial round of funding and usually secured to aggressively scale operations so that your business can grow to the next level or more. It can be secured from venture capitalists or private equity firms and at a stage when your company has some tangible milestones to its credit. However, it's important you tick mark a few important things before you go hunting for more money.

Differentiating between Series A and Series B
The Venture Capital (VC) industry in India is just about a decade-old and there are areas and aspects that will take time to mature. One of them is having clear benchmarks to differentiate two rounds of funding in terms of amount invested. Series A comes in when you are ready to build a stable product with live traffic (in case of a website) and prove that your product is worth buying. Series B, by this logic, comes in when you are looking to scale your company, and when you have a few customers who will validate you as credible. Investors typically take 20-25 percent in equity. So, you would use this round of financing to chalk out some desirable action plans for growth. It gives you the resources to grow or lets you invest in more resources.

Pre-empt the need
Raise money when you have money, not when you are running out of it. It's a good idea to start the process six months prior to your need. Some entrepreneurs tend to think that delaying the Series B round will let them own more of their firm. Not finding adequate funds can negatively impact your company. Not only does business suffer, but do keep in mind the livelihood and careers of your employees are also at stake. In fact the higher you go, the bigger your company becomes; and the more conservative you need to be. Don't be over-aggressive and get too late. The cost of things going wrong will be high.

The pitch
Remember, this stage is about reality, not fiction. It's also about right metrics and execution. Make sure you provide realistic numbers about virtual projections. VCs love to see customers and it forms the core of their decisions. Therefore, showing traction is the best way to securing this round, so do try and get some customers who will talk and validate your business. Remember: don't change your business model at this stage. However, you may bring in value additions to show its potential to scale. Convey your momentum and market readiness and keep the primary focus on growing your venture.

This story appeared in the July 2012 issue of Entrepreneur.